Euro stronger on equity inflows data; US dollar weaker

Story link: Euro stronger on equity inflows data; US dollar weaker

The euro staged a bit of a recovery on Monday on data showing portfolio inflows rising to €105.1 billion in June, much higher than the €22.7 billion in inflows in May. This was the highest level of equity inflow into the eurozone since the euro was created in 1999. Analysts feel that the revaluation of the renminbi by China in July could also help capital inflows into the eurozone, further supporting the euro.

The shared currency gained 0.6 percent in relation to the US dollar, to $1.2232, while it gained 0.2 percent to £0.6786 against sterling. The euro was flat against the yen, however, at ¥134.21.

The yen was helped by a poll showing the approval rating of Prime Minister Junichiro Koizumi has risen from 47.7 percent to 53.2 percent, up by 5.5 percent in a week’s time, leading up to the September 11 elections in Japan. Equity inflows have also been benefiting the yen. The Japanese currency gained 0.6 percent to ¥109.81 against the US dollar early on Monday before backing off some later in the day.

Meanwhile, the US dollar faded on the day, falling by 0.3 percent to #1.8014 in relation to sterling, while falling 0.5 percent to C$1.2038 against the Canadian dollar. The Canadian dollar was aided by rising retail sales figures and higher oil prices.